Q4 2025 M-Tron Industries Inc Earnings Call

March 26, 2026

Speaker #1: To M-tron Earnings call for Q4 2025. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session.

Speaker #1: We do requests for today's session that you please limit to one question only and one follow-up. If you would like to ask a question during this time, simply press Start, then the number 1 on your telephone keypad.

Speaker #1: To withdraw your question, press Star 1 again. I would now like to turn the conference over to Linda Biles, Executive Vice President of Finance.

Speaker #1: You may begin.

Speaker #2: Good morning, everyone. Thank you for joining our M-tron Q4 2025 and fiscal year 2025 earnings call. Please note that this call will be recorded and we will make the recording available on our website www.mtron.com.

Speaker #2: Shortly after the call. Tuesday afternoon we released our earnings for the fourth fiscal quarter of 2025 and annual fiscal year 2025. Before getting underway, we are required to advise you that the following discussion should be taken in conjunction with our most recent financial statements and notes as contained within our 2025 10-K, which was filed today on March 26th with the SEC.

Speaker #2: This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934.

Speaker #2: These forward-looking statements contain known and unknown risks and uncertainties which are detailed in our filings with the SEC. Although the company believes that the forward-looking statements are based upon reasonable assumptions, regarding its business and future market conditions, there are no assurances that the company actual results will not differ materially from any result expressed or implied by the company's forward-looking statements.

Operator: Hello, and thank you for standing by. My name is Bella, and I will be your conference operator today. At this time, I would like to welcome everyone to M-tron Earnings Call for Q4 2025. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. We do request for today's session that you please limit to one question only, and one follow-up. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. To withdraw your question, press star one again. I would now like to turn the conference over to Linda Biles, Executive Vice President of Finance. You may begin.

Speaker #2: The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the results of new information, future events, or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance.

Speaker #2: With that, I will now turn the call over to our CEO, Cameron Pforr.

Speaker #3: Thank you, Linda. Good morning, everyone, and thank you for joining our fourth quarter and annual FY25 earnings call. And your interest in the company.

Linda Biles: Good morning, everyone. Thank you for joining our M-tron Q4 2025 and fiscal year 2025 earnings call. Please note that this call will be recorded, and we will make the recording available on our website www.mtron.com shortly after the call. Tuesday afternoon, we released our earnings for the Q4 2025 and fiscal year 2025. Before getting underway, we are required to advise you that the following discussion should be taken in conjunction with our most recent financial statements and notes as contained within our 2025 10-K, which was filed today on 26 March 2026 with the SEC. This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934.

Speaker #3: We are pleased to discuss our strong finished 2025 fiscal year. In our outlook going forward, M-tron designs and manufactures highly engineered RF solutions including electronic components and sub-assemblies used to control the frequency, timing of signals and electronic circuits.

Speaker #3: We're a global company with three manufacturing sites in the United States and India. The company's primary markets include aerospace and defense, commercial avionics, space, and industrial markets.

Speaker #3: We're pleased to report that the company continue to perform well with continued strength in M-tron sales, and good financial performance for Q4 FY2025. Our revenues continue to be driven by defense-related orders and strong improvement in the commercial aircraft or what we call the avionics sector.

Linda Biles: These forward-looking statements contain known and unknown risks and uncertainties, which are detailed in our filings with the SEC. Although the company believes that the forward-looking statements are based upon reasonable assumptions regarding its business and future market conditions, there are no assurances that the company's actual results will not differ materially from any result expressed or implied by the company's forward-looking statements. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as the result of new information, future events, or otherwise. Readers are cautioned that any forward-looking statements are not guarantees of future performance. With that, I will now turn the call over to our CEO, Cameron Pforr.

Speaker #3: Bookings growth was particularly strong with a 62% increase in backlog over the 2024 year-end figure. With improved operating leverage, we have been able to continue to make strategic investments in research and development, and continued our efforts to increase the market profile of the company and the request for quotes that that visibility is generating.

Please note that this call will be recorded, and we will make the recording available on our website, www.metronic.com, and annual fiscal year 2025, before getting underway. We are required to advise you that the following discussion should be taken in conjunction with our most recent financial statements and notes, as contained within our 2025 10-K, which was filed today, on March 26th, with the SEC. This discussion may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These forward-looking statements contain known and unknown risks and uncertainties, which are detailed in our filings with the SEC. Although the company believes that the forward-looking statements are based upon

Reasonable assumptions regarding its business, and future market conditions. There are no assurances that the company actual results will not differ materially from any result expressed or implied by the company's forward-looking statements.

Speaker #3: We also continue to make investments in our production facilities and made several equipment upgrades in addition to our production lines as we prepare for increased demand.

Speaker #3: The past quarter has been an extremely active one for the defense sector. With the recent military action in Venezuela and Iran, it's easy to get distracted from some of the important fundamental industry news.

The company under undertakes, no obligation to publicly update, or revise, any forward-looking statements, whether as the results of new information future events or otherwise readers are cautioned at any. Forward-looking statements are not guarantees a future performance.

Cameron Pforr: Thank you, Linda. Good morning, everyone. Thank you for joining our Q4 and annual FY 25 earnings call and your interest in the company. We are pleased to discuss our strong finish to the 25 fiscal year and our outlook going forward. M-tron designs and manufactures highly engineered RF solutions, including electronic components and sub-assemblies used to control the frequency and timing of signals and electronic circuits. We're a global company with three manufacturing sites in the United States and India. The company's primary markets include aerospace and defense, commercial avionics, space, and industrial markets. We're pleased to report that the company continued to perform well with continued strength in M-tron sales and good P/E financial performance for Q4 FY 2025. Our revenues continue to be driven by defense-related orders and strong improvement in the commercial aircraft or what we call the avionics sector.

With that, I will now turn the call over to our CEO Cameron for.

Speaker #3: The FY2026 defense budget was approved for FY26 through HR7148, signed by President Trump in early 2026. With the White House and Department of War have also voiced a desired increase in military procurement to the $1.5 trillion level from the current annual $968 billion budget from 2026.

Thank you Linda. Uh, good morning everyone and thank you for joining our fourth quarter and annual fy2 earnings call and your interest in the company.

We are pleased to discuss our strong finish to the 2025 fiscal year and our outlook going forward.

Speaker #3: In February, both Lockheed Martin and Raytheon announced that they had signed seven-year production agreements with the Department of War to dramatically increase production over time for several important missile systems that each produce.

Endrin designs and manufactures highly engineered RF solutions, including electronic components and sub-assemblies used to control the frequency and timing of signals and electronic circuits.

We're a global company with 3, manufacturing sites in the United States and India.

The company's primary markets include aerospace and defense.

Speaker #3: M-tron has significant vendor to both of these companies for many precision-guided munition programs. Over the past several years, this has been one of the most significant growth areas for M-tron.

Commercial Avionics.

Space and Industrial markets.

Speaker #3: In fact, we believe that M-tron is one of the highest levels of missile content in its revenue, among publicly listed U.S.-based companies. After many months of discussion and planning around how we could significantly increase production levels, if required, we are now being asked to bid on components to several of these contracts.

We're pleased to report that the company continued to perform well, with continued strength in M, John sales, and good financial performance for Q4 FY 2025.

Cameron Pforr: Bookings growth was particularly strong with a 62% increase in backlog over the 2024 year-end figure. With improved operating leverage, we have been able to continue to make strategic investments in research and development and continued our efforts to increase the market profile of the company and the request for quotes that visibility is generating. We also continue to make investments in our production facilities and made several equipment upgrades in addition to our production lines as we prepare for increased demand. The past quarter has been an extremely active one for the defense sector. With the recent military action in Venezuela and Iran, it's easy to get distracted from some of the important fundamental industry news. The FY 2026 defense budget was approved for FY 2026 through H.R. 7148, signed by President Trump in early 2026.

Our revenues continue to be driven by defense, related orders and strong Improvement in the commercial aircraft or what we call the avionics sector.

Speaker #3: Provided that we do win significant design slots, we would anticipate not seeing an additional increase to our production volumes over what we received recently in December and January to late 2027 or '28.

Bookings growth was particularly strong with the 62% increase in backlog over the 2024 year. End figure.

With improved operating leverage, we have been able to continue to make strategic investments in research and development.

Speaker #3: Overall, we believe that we are well positioned to continue to perform well with a significant upside potential given the Department of War's actions and the recent conflict in Iran, which has not appeared to have been factored into the current demand cycle.

And continued our efforts to increase the market profile of the company.

And the request for quotes that that visibility is generating.

Speaker #3: We reported the following Q4 2025 results. Total revenues for the fourth quarter are $14.2 million, and $11.2% increase over the same period last year.

we also continue to make investments in our production facilities and made several equipment upgrades in addition to our production lines as we prepare, prepare for increased demand

The past quarter has been an extremely active one for the defence sector.

Speaker #3: Revenue increase in the period was primarily due to strong defense program product as well as avionics shipments. Gross margins for the fourth quarter of 2025 were $46.9 as compared to $47.2 in Q4 2024.

With the recent military action in Venezuela and Iran, it's easy to get distracted from some of the important fundamental industry news.

The FY 2026 defense budget.

Uh, was approved for FY26, through HR 7148.

Cameron Pforr: The White House and Department of Defense have also voiced a desire to increase military procurement to the $1.5 trillion level from the current annual $968 billion budget from 2026. In February, both Lockheed Martin and Raytheon announced that they had signed seven-year production agreements with the Department of Defense to dramatically increase production over time for several important missile systems that each produce. M-tron is a significant vendor to both of these companies for many precision-guided munition programs. Over the past several years, this has been one of the most significant growth areas for M-tron. In fact, we believe that M-tron has one of the highest levels of missile content in its revenue among publicly listed US-based companies.

Speaker #3: The gross margins were impacted by a level of tariffs not experienced in '24 and the product mix. Net income per deluded share was $99 cents for the three months ended December 31st, 2025, as compared to $73 cents per share in the prior year's period.

Signed by President Trump in early 2026 with the White House. And the department of award have also voiced a desired increase in military procurement.

To the 1.5 trillion level from the current annual 968 billion budget from 2026.

Speaker #3: An adjusted EBITDA was $4.5 million for the three months ending December 31st, '25, or an increase of $46.8% over the 3.1 million adjusted EBITDA for Q4 of FY2024.

In February both Lockheed Martin and Raytheon announced that they had signed 7-year production, agreements with the Department of War dramatically increased production over time for several important missile systems that each produce.

Enron is a significant vendor to both of these companies for many precision-guided munition programs.

Over the past several years, this has been one of the most significant growth areas for Imran.

Speaker #3: The increase was primarily driven by higher revenues and lower engineering sales and administrative expense as a percent of revenue, and was offset by the lower gross margins.

Cameron Pforr: After many months of discussion and planning around how we could significantly increase production levels if required, we are now being asked to bid on components to several of these contracts. Provided that we do win significant design slots, we would anticipate not seeing an additional increase to our production volumes over what we received recently in December and January to late 2027 or 2028. Overall, we believe that we are well positioned to continue to perform well with a significant upside potential given the Department of Defense's actions in the recent conflict in Iran, which does not appear to have been factored into the current demand cycle. We reported the following Q4 2025 results. Total revenues for Q4 were $14.2 million, an 11.2% increase over the same period last year.

In fact, we believe that Enron is one of the highest levels of missile content in its revenue among publicly listed US-based companies.

Speaker #3: Backlog at the end of the quarter was $76.4 million as compared to $47.2 million as of December 31st, 2024. The $62% increase reflects the continued strategy and focus on securing large long-duration program-centric business.

After many months of discussion and planning around how to get significantly increased production levels, if required, we are now being asked to bid on components to several of these contracts.

Speaker #3: During 2025, we secured several multi-year purchase orders for defense programs. In addition, the timing of these purchase orders can materially affect backlog. For the fiscal 2025 year, we reported the following results.

Overall, we believe that we are well positioned to continue to perform well with a significant upside potential. Given the department of Wars actions and the recent conflicts in Iran which is not appear to have been factored into the get the current demand cycle.

We reported the following Q4 2025 results.

Speaker #3: Total revenues for the 2025 fiscal year were $54.4 million, and $11.2% increase over the same period last year. The revenue increase in the period primarily due to defense program product and solutions shipments as well as an increase in avionics shipments.

Total revenues for the fourth quarter are $14.2 million.

Cameron Pforr: The revenue increase in the period was primarily due to strong defense program product, as well as avionics shipments. Gross margins for Q4 2025 were 46.9%, as compared to 47.2% in Q4 2024. The gross margins were impacted by a level of tariffs not experienced in 2024, and the product mix. Net income per diluted share was $0.99 for the three months ended 31 December 2025, as compared to $0.73 per share in the prior year's period. Adjusted EBITDA was $4.5 million for the three months ending 31 December 2025, for an increase of 46.8% over the $3.1 million Adjusted EBITDA for Q4 of FY 2024.

And 11.2% increase over the same period last year.

Revenue increased in the period was primarily due to strong defense program product.

Speaker #3: Gross margins for '25 were $44.4% as compared to $46.2% gross margin in 2024. Gross margin was impacted by the higher tariff-related costs and the less favorable product mix compared to 2024.

As well as avionic shipments.

Gross margins, for the fourth quarter of 2025 were 46.9 as compared to 47.2 and Q4 2024.

The gross margins were impacted by a level of tariffs not experienced in '24 and the product mix.

Speaker #3: Primarily around new product introductions. Net income was $8.4 million, or $2.62% per deluded dollar. Per deluded share in 2025. As compared to $7.6 million, or $26.5 per share in '24.

Net income per delivery. Share was 99, Cents for the 3 months, ended December 31st 2025.

As compared to 73 cents per share in the prior year period.

An adjusted Eva was 4.5 million for the 3 months, ending, December 31st 255.

Speaker #3: The increase in the actual net income was driven to the increase in revenue partially offset by the higher cost of sales. Adjusted EBITDA was $12.6 million in 2025 as compared to $11.1 million in 2024.

Cameron Pforr: The increase was primarily driven by higher revenues, lower engineering, sales, and administrative expense as a percent of revenue, and was offset by the lower gross margins. Backlog at the end of the quarter was $76.4 million as compared to $47.2 million as of 31 December 2024. The 62% increase reflects the continued strategy and focus on securing large, long-duration, program-centric business. During 2025, we secured several multiyear purchase orders for defense programs. In addition, the timing of these purchase orders can materially affect backlog. For the fiscal 2025 year, we reported the following results.

which is an increase of 46.8% over the 3.1 million of the adjusted view for Q4 of FY 2024,

The increase was primarily driven by higher revenues.

Speaker #3: The increase was primarily due to higher revenues continued operating leverage and a lower incentive compensation partially offset by lower gross margins. Speaking of lower compensation expense, in 2024, the company paid a cash bonus to employees and management for overachieving its annual plan.

Lower engineering sales and administrative expense as a percent of Revenue and was offset by the lower gross margins.

Backlog at the end of the quarter was $76.4 million, as compared to $47.2 million as of December 31, 2024.

The 62% increase reflects the continuous strategy.

Speaker #3: In 2025, management anticipated the company being able to achieve similar results against plan, but the results were all reflecting solid operational execution in a challenging environment marked by tariffs and increased new product introductions did not achieve this result.

And focus on. Securing large long duration, program Centric business.

During 2025, we secured several multi-year purchase orders for defense programs.

In addition, the timing of these purchase orders can materially affect the backlog.

Speaker #3: As the company as a result, the company reversed $860,000 in earlier accrued incentive compensation expense. Which had a favorable 6% impact on the fourth quarter results.

Cameron Pforr: Total revenues for the 2025 fiscal year were $54.4 million, an 11.2% increase over the same period last year. The revenue increased in the period primarily due to defense program product and solution shipments, as well as an increase in avionics shipments. Gross margins for 2025 were 44.4% as compared to 46.2% gross margin in 2024. Gross margin was impacted by the higher tariff-related costs and a less favorable product mix compared to 2024, primarily around new product introductions. Net income was $8.4 million, or $2.62 per diluted share in 2025, as compared to $7.6 million or $2.65 per share in 2024.

For the fiscal 2025 year, we reported the following results.

Speaker #3: For comparison purposes, in fiscal year 2024, the cash bonus plan expense totaled $1.4 million, representing approximately 3% of revenue. For 2025, the board decided to grant stock compensation in lieu of cash to further align the long-term interest of employees and management with shoulder shareholders.

Total revenues for the 2025 fiscal year were 54.4 million and 11.2% increase of the same period last year.

The revenue increased in the period primarily due to defense program product in the solution shipments as well as an increase in avionic shipments.

Gross margins are 25, we're 44.4%.

As compared to 46.2%, gross margin 2024.

Speaker #3: The board of directors now intends to develop a more balanced incentive plan, expected to incorporate several performance metrics designed to encourage measure and reward the long-term sustainable growth of the company's revenue and earnings.

Gross margin was impacted by the higher tariff-related costs and a less favorable product mix compared to 2024.

Primarily around new product introductions.

Speaker #3: We had a lot of activity in Q4 2025 to strengthen the balance sheet. M-tron Operations are at the performance level currently where it's starting to accumulate cash on the balance sheet.

Net income was $8.4 million, or $2.62 per diluted share, in 2025.

Cameron Pforr: The increase in the actual net income was driven through the increase in revenue, partially offset by the higher cost of sales. Adjusted EBITDA was $12.6 million in 2025 as compared to $11.1 million in 2024. The increase was primarily due to higher revenues, continued operating leverage, and a lower incentive compensation, partially offset by lower gross margins. Speaking of the lower compensation expense, in 2024, the company paid a cash bonus to employees and management for overachieving its annual plan. In 2025, management anticipated the company being able to achieve similar results against plan, but the results, while reflecting solid operational execution in a challenging environment marked by tariffs and increased new product introductions, did not achieve this result.

Compared to 7.6 million or 26.5 dollars per share in 24.

Speaker #3: In fiscal year 2025, we added $10.7 million of cash through operations. In addition, in December 2025, we sent a newer loan agreement with Fifth Third Bank, which provided the company the ability to borrow up to $20 million at a very competitive rate based on company leverage.

The increase in the actual net income was driven by the increase in revenue.

Partially offset by the higher cost of sales.

Adjusted Eva de was 12.6 million in 2025, as compared to 1 1. 1 2 4.

Speaker #3: Currently, we have no debt outstanding. And haven't drawn upon this line. Lastly, at the end of the year, we closed the warrant offering that we launched in the spring of 2025.

The inquiries was primarily due to the higher revenues continued operating leverage and the lower incentive compensation partially offset by lower gross margins.

Speaker #3: The offering was fully subscribed with $582,233 shares being issued at the end of December and early January. And net proceeds of $27.5 million being raised for the company.

Speaking about our compensation expense and 2024, the company paid a cash bonus to employees and management for overachieving its annual plan.

In 2025, management anticipated the company being able to achieve similar results against plan.

Speaker #3: Increasing our flexibility to pursue acquisitions that align with our long-term strategy. At the end of the period, M-tron had $20.9 million of cash on the balance sheet, with an additional $27.5 million being transferred early January 2026 to the company from our transfer agent as warrant proceeds.

Cameron Pforr: As a result, the company reversed $860,000 in earlier accrued incentive compensation expense, which had a favorable 6% impact on the Q4 results. For comparison purposes, in fiscal year 2024, the cash bonus plan expense totaled $1.4 million, representing approximately 3% of revenue. For 2025, the board decided to grant stock compensation in lieu of cash to further align the long-term interests of employees and management with shareholders. The board of directors now intends to develop a more balanced incentive plan expected to incorporate several performance metrics designed to encourage, measure, and reward the long-term sustainable growth of the company's revenue and earnings. We had a lot of activity in Q4 2025 to strengthen the balance sheet.

But the results, while reflecting solid operational execution in a challenging environment marked by tariffs and increased new product introductions, did not achieve, uh, this result.

As a result, the company reversed $860,000 in earlier accrued incentive compensation expense.

Which had a favorable 6% impact on the fourth quarter results.

Speaker #3: As we look forward into 2026, we continue to expand our defense program business, which makes up the vast majority of our aerospace and defense revenue.

For comparison purposes, in fiscal year 2024, the cash bonus plan expense totaled $1.4 million, representing approximately 3% of revenue.

Speaker #3: Two of the areas where we expect strong growth in '26 and '27 are radar and electronic warfare. These are areas that we emphasize from a sales and engineering perspective several years ago.

For 2025 the board decided to grant stock compensation, in Leo, in lieu of cash to further. Align the long-term interests of employees and management on the shoulder. Sure.

Speaker #3: There's a broad redesign of many military fire control radars due to the change in warfare incorporating a breadth of weapons ranging from hypersonic missiles to small and slow-moving or even loitering drones.

The board of directors. Now intends to develop a more balanced incentive plan. Expected to incorporate several performance metrics designed encouraging measure and reward. The long-term sustainable growth of the company's revenue and earnings.

Cameron Pforr: M-tron operations are at the performance level currently where it's starting to accumulate cash on the balance sheet. In fiscal year 2025, we added $10.7 million of cash through operations. In addition, in December 2025, we signed a newer loan agreement with Fifth Third Bank, which provided the company the ability to borrow up to $20 million at a very competitive rate based on company leverage. Currently, we have no debt outstanding and haven't drawn upon this line. Lastly, at the end of the year, we closed a warrant offering that we launched in the spring of 2025. The offering was fully subscribed, with 582,233 shares being issued at the end of December and in early January.

Speaker #3: There's also a newer class of mid-range radar being developed and widely deployed for counter-drone missions. We are active in this market as well, and have seen demand increase over the recent periods.

Enron operations are at the performance level currently, where it's starting to accumulate cash on the balance sheet.

Speaker #3: Control over the electromagnetic spectrum is more important than ever, as autonomous software-driven systems play a greater role in the battlefield. We also continue to expect or strong growth throughout the year from commercial avionics shipments.

In fiscal year 2025, we added $10.7 million of cash through operations.

In addition, in December 2025, we send a newer loan agreement with Fifth Third Bank, which provided the company the ability to borrow up to twenty million dollars at a very competitive rate based on company Leverage.

Speaker #3: As we serve key suppliers to both Boeing and Airbus, our position in this market is quite strong, and our products are used in 15 to 17 different applications on every commercial airframe that Airbus and Boeing produce.

Currently, we have no debt outstanding and haven't drawn upon this line.

Lastly, at the end of the year, we closed the warrant offering that we launched in the spring of 2025.

Speaker #3: With inventories largely depleted at the airframe manufacturers, orders for components and subsystems have picked up as the airframe manufacturers execute on their backlog projected to be strong through 2035.

Cameron Pforr: Net proceeds of 27 and a half million being raised for the company, increasing our flexibility to pursue acquisitions that align with our long-term strategy. At the end of the period, M-tron had $20.9 million of cash on the balance sheet, with an additional $27.5 million being transferred early January 2026 to the company from our transfer agent as warrant proceeds. As we look forward into 2026, we continue to expand our defense program business, which makes up the vast majority of our aerospace and defense revenue. Two of the areas where we expect strong growth in 2026 and 2027 are radar and electronic warfare. These are areas that we emphasized from a sales and engineering perspective several years ago.

The offering was fully subscribed, with 582,233 shares being issued at the end of December and early January.

And net proceeds of $27.5 million being raised for the company.

Increasing our flexibility to pre pursue Acquisitions that. Align with our long-term strategy.

Speaker #3: While our management team is focused on executing on our organic growth strategy, we are placing a greater emphasis on combining that with inorganic growth through partnership and acquisitions.

At the end of the period, M-Tron had $20.9 million of cash on the balance sheet.

Speaker #3: In 2025, we formed three strategic partnerships with Complementary Product Companies. We recently announced a rights offering to provide the team greater flexibility to execute against our execution or acquisition strategy.

With an additional 27.5 million being transferred early to January 2026 to the company from our transfer agent. As warrant proceeds,

As we look forward into 2026, we continue to expand our defense program business, which makes up the vast majority of our Aerospace and Defense revenue.

Speaker #3: The record date for these rights will be tomorrow, March 27th, 2026. Shareholders of record who exercise their full basic subscription rights are eligible to participate in the oversubscription feature should there be unallocated shares from the offering.

Two of the areas where we expect strong growth in '26 and '27 are radar and electronic warfare.

Cameron Pforr: There's a broad redesign of many military fire control radars due to the change in warfare, incorporating a breadth of weapons ranging from hypersonic missiles to small and slow-moving or even loitering drones. There's also a newer class of mid-range radar being developed and widely deployed for counter-drone missions. We are active in this market as well and have seen demand increase over the recent periods. Control of the electromagnetic spectrum is more important than ever as autonomous software-driven systems play a greater role in the battlefield. We also have continued to expect strong growth throughout the year from commercial avionics shipments as we serve key suppliers to both Boeing and Airbus. Our position in this market is quite strong, and our products are used in 15 to 17 different applications on every commercial airframe that Airbus and Boeing produce.

These are areas that we emphasized from a sales and engineering perspective several years ago.

Speaker #3: The offering is expected to launch early next week, and the rights are expected to expire on April 15th, 2026. Five rights will be required to purchase one share of common stock, and the subscription price per share will be determined next week when we file our prospective supplement on Monday or Tuesday, March 30th or 31st.

There's a broad redesign of many military fire control radars due to the change in warfare, incorporating a breadth of weapons ranging from hypersonic missiles to small and slow-moving, or even loitering, drones.

There's also in your class A mid-range radar being developed and widely deployed for counter drone missions.

We are active in this market as well as being demand increase of the recent periods.

Speaker #3: It's anticipated that the subscription price will be at a 10 to 12 percent discount to the trailing five-day volume-weighted average price per share. This offering is designed to support accretive acquisitions, the ability to perform carve-outs, or participate in carve-outs, transactions at scale, to pursuit of strategic investments and also to expand our internal capabilities to meet demand.

Control of the electromagnetic spectrum is more important than ever as autonomous, software-driven systems play a greater role in the battlefield.

We also continue to expect or uh strong growth throughout the year from commercial avionic shipments.

As we serve key suppliers to both Boeing and Airbus.

Our position in this market is quite strong, and our products are used in 15 to 17 different applications on every commercial airframe that Airbus and Boeing produce.

Cameron Pforr: With inventories largely depleted at the airframe manufacturers, orders for components and subsystems have picked up as the airframe manufacturers execute on their backlog, projected to be strong through 2035. While our management team is focused on executing on our organic growth strategy, we are placing a greater emphasis on combining that with inorganic growth through partnership and acquisitions. In 2025, we formed three strategic partnerships with complementary product companies. We recently announced a rights offering to provide the team greater flexibility to execute against our acquisition strategy. The record day for these rights will be tomorrow, 27 March 2026.

Speaker #3: I'd like to thank our loyal employees for supporting the company in its mission of serving the nation and its capability to defend freedom. M-tron plays a critical role in defense our nation by providing US-sourced highly engineered components for many US and allied military programs.

With inventories largely depleted at the airframe. Manufacturers.

Orders for components and subsystems have picked up as the airframe manufacturers executed on their backlog projected to be strong through 2035.

Speaker #3: Strengthening the US defense industrial base is more important than ever, and we thank our employees for their dedication to their jobs. Their fellow employees in our mission.

While our management team is focused on executing on our organic growth strategy,

Speaker #3: We also want to thank our customers for their continued business and partnership. I want to mention that we will be holding an investor day in New York on May 12th, beginning at 12:00 PM at the New York Stock Exchange, at 11:00 Wall Street.

We are placing a greater emphasis on combining that with inorganic growth through partnerships and acquisitions.

In 2025, we formed three strategic partnerships with complementary product companies.

Speaker #3: I hope you can attend that. Please check our investor relations calendar. On our IR website, irmtron.com, for announcements about this and other investor events.

We recently announced a price offering to provide the team in Greater flexibility to execute against our execution strip or acquisition strategy.

Cameron Pforr: Shareholders of record who exercise their full basic subscription rights are eligible to participate in the oversubscription feature, should there be unallocated shares from the offering. The offering is expected to launch early next week, and the rights are expected to expire on 15 April 2026. 5 rights will be required to purchase one share of common stock, and the subscription price per share will be determined next week when we file our prospectus supplement on Monday or Tuesday, 30 or 31 March. It's anticipated that the subscription price will be at a 10% to 12% discount to the trailing 5-day volume-weighted average price per share. This offering is designed to support accretive acquisitions, the ability to perform carve-outs or participate in carve-outs, transactions of scale, the pursuit of strategic investments, and also to expand our internal capabilities to meet demand.

The record date for these rights will be tomorrow, March 27th 2026.

Speaker #3: With that, operator, can you please open the lines and allow the first question?

Shareholders of record who exercise their full basic subscription rights are eligible to participate in the overs subscription feature. Should there be unallocated shares from the offering?

Speaker #1: Sam, I would like to remind everyone in order to ask a question. Press start is in the number one on your telephone keypad. We do request for today's session that you please limit to one question and one follow-up.

The offering is expected to launch early next week.

And the rights are expected to expire on April 15, 2026.

Five rights will be required to purchase one share of common stock.

Speaker #1: We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Anja Soderstrom with Zan Adair.

And the subscription price per share will be determined next week when we file our prospective supplement on Monday or Tuesday March 30th of 31st.

Speaker #1: Please go ahead.

Speaker #2: Hi, and thank you for taking my questions. You've done a lot to strengthen the balance sheet lately, and what's the motivation for this rights offering?

Its anticipated that the subscription price will be at a 10 to 12%. Discount to the trailing 5-day volume weighted average price per share.

This offering is designed to support a creative acquisitions.

Speaker #3: Yeah, morning, Anja. Thank you for being on the call. The rights offering really is it reflects a lot of the changes in the industry that are taking place right now.

The ability to perform carve.

Speaker #3: There is a tremendous amount of demand in the market, for example, for some of these larger seven-year engagements. We're being asked now to assemble quotes to handle the demand curve, as well as obviously make the financings necessary to increase our own capacity.

Cameron Pforr: I'd like to thank our loyal employees for supporting the company and its mission of serving the nation and its capability to defend freedom. M-tron plays a critical role in defending our nation by providing US-sourced, highly engineered components for many US and allied military programs. Strengthening the US defense industrial base is more important than ever, and we thank our employees for their dedication to their jobs, their fellow employees, and our mission. We also want to thank our customers for their continued business and partnership. I want to mention that we will be holding an investor day in New York on 12 May, beginning at 12:00PM at the New York Stock Exchange at 11 Wall Street. Hope you can attend that. Please check our investor relations calendar on our IR website, ir.mtron.com, for announcements about this and other investor events.

The participating car outs transactions to scale the pursuit of strategic investments, and also to expand our internal capabilities to meet demand.

I'd like to thank our loyal employees for supporting the company and its mission of serving the nation and its capability to defend freedom.

Speaker #3: But it's really been driven more we're going to do that with some of the proceeds, but it's really more being driven by some of the pressure from the industry from the Department of War on primes to become more nimble.

Emtron plays a critical role in the transformation by providing us Source. Highly engineered components for many US and allied military programs.

Strengthening the U.S. defense industrial base is more important than ever, and we thank our employees for their dedication to their jobs, their fellow employees, and our mission.

Speaker #3: So we do expect divestitures from primes as well as a number of PE firms trying to find exits for their portfolio companies in the space.

Thank our customers for their continued business and partnership.

Speaker #3: And we think this is creating more of an opportunity than we've seen in the past to do potentially larger transactions. It could be a carve-out or it could be a merger of equals, that kind of thing, but it definitely helps to have cash on the balance sheet to be able to execute and be included in processes and kind of improves basically bankers and other intermediaries' belief of certainty of close.

Uh, I want to mention that we will be holding an Investor Day in New York on May 12th, beginning at 12 p.m. at the New York Stock Exchange.

At 11 Wall Street.

Cameron Pforr: With that, operator, can you please open the lines and allow the first question?

I hope you can attend that. Please check our investor relations calendar on our IR website, ir.mtron.com, for announcements about this and other investor events.

With that. Operator, can you please open the line and allow the first question?

Speaker #3: So we believe that having a stronger balance sheet is going to allow M-tron to take advantage of the opportunities. And also strengthen us our posture, I guess, with primes as they look to us as a key supplier as the demand increases.

Operator: Simon, I would like to remind everyone in order to ask a question, press star and then the number one on your telephone keypad. We do request for today's session that you please limit to one question and one follow-up. We will pause for just a moment to compile the Q&A roster. Your first question comes from the line of Anja Soderstrom with Sidoti. Please go ahead.

so, I'm

I would like to.

Speaker #1: Oh, okay. Thank you. And then in terms of the growth margin, nice work there. On a sequential basis, even though the revenue didn't increase that much on a sequential basis, is that all mostly then driven by the product mix and you're ramping your programs since the tariff seems to have had a negative effect?

To ask a question, press star and then the number 1 on your telephone keypad. We do request for today's session that you please limit yourself to one question and one follow-up.

We will pause for just a moment to compile the Q&A roster.

Anja Soderstrom: Hi, thank you for taking my questions. You've done a lot to strengthen the balance sheet lately. What's the motivation for this rights offering?

Your first question comes from the line of Angela's daughter, Storm, with Sedati. Please go ahead.

Speaker #1: So I'm just trying to figure out as we lapse this tariff impact how should we think about growth margin for next year.

Cameron Pforr: Yeah. Good morning, Anja Soderstrom. Thank you for, you know, being on the call. The rights offering really is, it reflects a lot of the changes in the industry that are taking place right now. There is a tremendous amount of demand in the market. For example, for some of these larger seven-year engagements, we're being asked now to assemble quotes, to handle the demand curve, as well as obviously make the financings necessary to increase our own capacity. It's really being driven more. We're gonna do that with some of the proceeds, but it's really more being driven by some of the pressure from the industry, from the Department of Defense on primes to become more nimble.

Hi, and thank you for taking my questions. Um, you don't have a lot to send in the balance sheet lately, and what's the motivation for this right suffering?

Speaker #3: Yeah, no, it's good questions. So some of the impact in December of '25, that was if you look at that, it was a little bit lower than the prior year.

Yeah, morning on you. Thank you for, you know, being on the call. Um, the right offering really is—it reflects a lot of the changes in the industry that are taking place right now.

Speaker #3: And that was the impact of tariffs as well as still some residual product mix issues. And that's just really from newer products. But in December of '24 and also September of '24 quarters, we also had some last-time buys at very, very high margins, and those are more periodic, I guess.

Speaker #3: If we look forward, though, it's I do believe that we'll have a more favorable product mix going forward, but we do have an increase in the orders for some of these newer products we've been producing.

Cameron Pforr: We do expect divestitures from primes, as well, as a number of PE firms trying to find exits for their portfolio companies in this space. We think this is creating more of an opportunity than we've seen in the past to do potentially larger transactions. It could be a carve-out, or it could be a merger of equals, that kind of thing, but it definitely helps to have cash on the balance sheet to be able to execute, being included in processes kind of improves basically bankers' and other intermediaries' belief of certainty of close. We believe that having a stronger balance sheet is gonna allow M-tron to take advantage of the opportunities, and also strengthen our posture, I guess, with primes as they look to us as a key supplier as the demand increases.

Um, there is a tremendous amount of demand in the market. Uh, for example, for some of these larger 7-year engagements, we're being asked, now, to assemble quotes, uh, to handle that that demand curve as well as obviously, make the financing necessary to increase our own capacity, but it's really been driven more. We're we're going to do that with some of the proceeds, but it's really more driven by some of the the pressure uh from the industry from the Department of work on primes to become more nimble.

Speaker #3: So we're still kind of working through what that impact is. But we do expect a slightly more favorable tariff environment next year. We in 2025, tariffs impacted our gross margins by about 1%.

So we do expect of Estes from times as well as a number of P FMS, trying to find exits for their portfolio companies in the space.

and we think this is creating more of an opportunity than we've seen in the past to do potentially larger transactions,

Speaker #3: We do expect them to be a little bit less in 26 and forward, but we're just starting to see some changes in tariffs being implemented now, and it's obviously it's a moving target.

It could be a carveout, or it could be a merger of equals, that kind of thing, but it definitely helps to have cash on the balance sheet to be able to execute.

And then be included in processes and kind of improves, basically, bankers and other innovator areas, belief of certainty of close.

Speaker #3: We'll see what comes out.

Speaker #1: Okay. Thank you. And then one last one in terms of the backlog, nice work there as well. What was the most of the growth coming from?

So we believe that having a stronger balance, she's going to allow him to try and take advantage of the opportunities.

Uh, and also strengthen this—you know, our posture, I guess, with pride. As they look to us as a key supplier, as demand increases,

Anja Soderstrom: Okay, thank you. In terms of the gross margin, nice work there on a sequential basis. Even though the revenue didn't increase that much on a sequential basis, is that all mostly then driven by the product mix and you ramping new programs since the tariff seems to have had a negative effect. I'm just trying to figure out as we lap this tariff impact, how should we think about gross margin for next year?

Speaker #3: Yeah. So the backlog was driven by defense and aerospace and then avionics. Both of those were strong developer growth areas in the backlog. Earlier in the year, we did see some increase in space as well.

Speaker #3: And we're hoping that as we look into 27, 28, there'll be more opportunities in space, especially resulting from the golden dome initiatives.

Oh okay, thank you. And then in terms of uh the growth margin uh nice work there. Um, a sequential basis even though the revenue didn't increase that much on the sequential basis is that all

by the product mix and you ramping your programs since the Tariff seems to have had a negative effect. So I'm just trying to

Speaker #1: Okay. Great. Thank you. That was helpful for me.

Speaker #3: Thank you, Anja.

Cameron Pforr: Yeah. No, it's a good question. Some of the impact in December of 2025, that was, you know, if you look at that, it was a little bit lower than the prior year. And that was the impact of tariffs as well as still some residual product mix issues, and that's just really from newer products. But in December of 2024 and also September quarter of 2024, we also had some last-time buys at very high margins, and those are more periodic, I guess. If we look forward, though.

Figure out a 3 laps. This tariff impact, how should we think about growth market for next year?

Speaker #1: Your next question comes from the line of Zan Adair with Freedom Broker. Please go ahead.

Yeah, no, that's a good question.

So, some of the impacts in, uh,

Speaker #4: Hi. Thank you for taking my question. First, it relates to the how meaningful is the drone exposure today in your business and can it become a more material part of the mix over time?

In December of 25 that was, you know, if you look at that, it was a little bit lower than the prior year. Um, and that was the impact of terrorists.

As well as, uh, still some residual product mix issues.

Speaker #3: So, Zan, thank you for joining. So you were asking about the exposure to the drone warfare?

Speaker #4: Yes.

Speaker #3: Yes. Okay. Yeah, drones are definitely an active part of our business. We participate in two ways. So one is we do sell solutions and components to several of the manufacturers of drones.

Um, and that's just really from newer products but in in um, December of 24 and also September 24th quarters. We also had some last time buys at very, very high margins and

That is our, uh, more periodic, I guess.

Anja Soderstrom: Okay.

Cameron Pforr: You know, I do believe that we'll have a more favorable product mix going forward, but you know, we do have an increase in orders for some of these newer products we've been producing, so we're still kind of working through what that impact is. We do expect a slightly more favorable tariff environment next year. In 2025, tariffs impacted our gross margins by about 1%. We do expect them to be a little bit less in 2026 and forward, but we're just starting to see some changes in tariffs being implemented now, and, you know, it's obviously a moving target. We'll see what comes out.

Speaker #3: We've been doing that since 2014. We tend to service some of the primes that are making the larger drones. So maybe there were ISR or kinetically focused, but these are the larger drones like you can think about those as Global Hawk and Reapers and things like that.

If we look for, though, you know, it's, um, I do believe that we'll have a more favorable product mix going forward. But, you know, we do have an increase in the orders for some of these newer products we've been producing, so we're still kind of working through what that impact is. But we do expect a slightly more favorable tariff environment next year. Um, we, uh, in 2025, tariffs impacted our gross margins by that 1%.

Speaker #3: That class of drone. We do not participate in the FPV drones. Those are usually as they're very, very treadable designed with less expensive parts that don't really rely on reliability.

We do expect them to be a little bit less in 26 and forward, but we're just starting to see some changes in tariffs being implemented now and it's, you know, it's obviously it's a moving Target. We'll, we'll see what. What comes out.

Anja Soderstrom: Okay. Thank you. One last one in terms of the backlog. Nice growth there as well.

Speaker #3: Or wouldn't pay for reliability. So that's a relatively small part of our business, but it is growing. In the prior year, we typically do like one and a half to two million of revenue in that space.

Okay, thank you. And that uh, 1 last 1 in transfer the backlog.

Cameron Pforr: Mm-hmm.

Anja Soderstrom: What was most of your growth coming from?

Cameron Pforr: The backlog was driven by defense and aerospace and then avionics. Both of those were strong developer growth areas in the backlog. Earlier in the year, we did see some increase in space as well. We're hoping that as we look into 2027, 2028, there'll be more opportunities in space, especially resulting from the Golden Dome initiatives.

Where was most of the growth coming from?

Speaker #3: But I think that's going to grow. The other area that's also very, very much impacted by drone warfare is what's happening in the radar space.

Speaker #3: So most of the radar systems that we support are being redesigned because of drones. But then we're also getting very significant orders and a lot of growth in this mid-range radar, which is almost entirely focused on counter-drone warfare.

Anja Soderstrom: Okay, great. Thank you. That was all for me.

Speaker #3: And that will become a substantial part of our revenue going forward. We believe.

Cameron Pforr: Mm-hmm. Thank you, Anja.

Okay, great. Thank you. That will help for me.

Thank you.

Operator: Your next question comes from the line of Zan Adair with Freedom Broker. Please go ahead.

Speaker #4: Okay. Thank you. It's helpful for me. But can you quantify the radar systems revenue for the 2026?

Your next question comes from the line of Jean Adair with freedom broker. Please go ahead.

Zan Adair: Hi. Thank you for taking my question. First, it relates to how meaningful the drone exposure is today in your business, and can it become a more material part of the mix over time?

Speaker #3: Could you just repeat that with a little hard to understand?

Speaker #4: Or maybe

Uh, hi. Thank you for taking my question. Uh, first, it relates to how meaningful the drone exposure is today in your business, and can it become a more material part of the mix over time?

Cameron Pforr: Zan, thank you for joining. You were asking about the exposure to the drone warfare?

Speaker #3: Could you just repeat that? It was a little bit hard to understand.

Speaker #4: Oh, okay. First, can you quantify the revenue exposure from the radar systems for the 2026? Or maybe some part of them?

Zan Adair: Yes.

Uh design, thank you for joining. See you were asking about the exposure to the Drone Warfare.

Cameron Pforr: Yes. Okay. Drones are definitely an active part of our business. We participate in two ways. One is we do sell solutions and components to several of the manufacturers of drones. We've been doing that since 2014. We tend to service some of the primes that are making the larger drones. They maybe were ISR or kinetically focused, but these are the larger drones, like, you know, you can think about those as like Global Hawk and Reapers and things like that class of drone. We do not participate in the FPV drones. Those are usually, as they're very attritable, designed with less expensive parts that don't really rely on reliability or wouldn't pay for reliability.

Yes.

Yes. Okay. Uh, yeah. Drones are definitely an active part of our business. Um, we participate in two ways.

Speaker #3: Do you want me to quantify the drone exposure in 2026?

Speaker #4: Yes. Also, radar systems also.

Speaker #3: Yeah. I think it'll probably total around roughly $4 million, probably. But

Speaker #4: That's all for me. Thank you.

Speaker #3: Thank you.

So, one is we do sell solutions and components of several of the manufacturers of drones. We've been doing that since 2014. We tend to service some of the primes that are making the larger drones. So, they maybe—they were ISR, kinetically focused—but these are larger drones, like, um, you know, you can think about those as like Global Hawk and Reapers and things like that, that class of drone.

Speaker #1: That concludes our Q&A session. I will now turn the call back over to Cameron Pforr for closing remarks.

Speaker #3: Okay. Well, thank you, everyone. Appreciate the questions. I'd like to thank everybody for participating today and your interest in Intron. Have a great day, and please contact us at ir@intron.com.

Cameron Pforr: That's a relatively small part of our business, but it is growing. In the prior year, we typically do, like, $1.5 to 2 million of revenue in that space. But I think that's gonna grow. The other area that's also very, very much impacted by drone warfare is what's happening in the radar space. Most of the radar systems that we support are being redesigned because of drones. But then we're also getting very significant orders and a lot of growth in this mid-range radar, which is almost entirely focused on counter-drone warfare. That will become a substantial part of our revenue going forward, we believe.

Uh, we do not participate in the FPV drones. Those are usually, um, as they're very, very tradable, um, designed with less expensive parts that don't really rely on reliability, or wouldn't pay for, like, reliability.

Speaker #3: Should you have any additional questions, we'd be happy to handle those.

So that's a, a relatively small part of our business but it is growing um, in the prior year, uh we typically do like 1 and a half to 2 million of of Revenue in that space.

Um, but I think that's going to grow the other area. That's also very, very much impacted by drone Warfare, is what's happening in the radar space. So most of the radar systems that we support are being redesigned because of drones, but then we're also getting, um, very significant orders and and a lot of growth in this mid-range radar, which is almost entirely focused on counter drone Warfare and, and that, that will become a substantial part of our Revenue going forward, we believe,

Zan Adair: Okay. Thank you. It's helpful for me. Can you quantify the radar systems revenue for 2026?

Cameron Pforr: Could you just repeat that? That was a little bit hard to understand.

Okay. Thank you. It's helpful for me. But, uh, but uh, can you quantify the other systems, uh, revenue for the 2266?

Cameron Pforr: Could you just repeat that? That was a little bit hard to understand.

Could could you just repeat that all the time?

Zan Adair: Can, uh-

Cameron Pforr: Could you re-

Zan Adair: Maybe. Mm-hmm.

Cameron Pforr: Could you just repeat that? It was a little bit hard to understand.

Okay, or maybe mhm.

Zan Adair: Oh, okay. First, can you quantify the revenue exposure from the radar systems for 2026? Or maybe some color on them.

Could you just repeat that? It was a little bit hard to understand.

Oh, okay. Uh first uh, can you quantify the revenue exposure from the radar systems for the 2026 uh or maybe some power of them?

Cameron Pforr: You want me to quantify the drone exposure in 2026?

Zan Adair: Yes. Also radar systems.

uh, you wanted me to quantify the the Drone exposure in 2026,

Cameron Pforr: Yeah. I think, you know, it'll probably total around roughly $4 million probably. But it

Yes. Also at our systems also,

Yeah, I think, you know, it'll probably total around, uh, roughly $4 million.

Zan Adair: Okay. Yeah.

Cameron Pforr: Mm-hmm. Mm-hmm.

But okay.

Zan Adair: That's all for me. Thank you.

Mhm. Mhm.

Cameron Pforr: Yeah. Thank you.

Yeah, that's all for me. Thank you.

Thank you.

Operator: That concludes our Q&A session. I will now turn the call back over to Cameron Pforr for closing remarks.

That concludes our Q&A session. I will now turn the call back over to Cameron for closing remarks.

Cameron Pforr: Okay. Well, thank you everyone. Appreciate the questions. I'd like to thank everybody for participating today and your interest in M-tron. Have a great day, and please contact us at ir@mtron.com. If you should have any additional questions, we'd be happy to handle those.

Okay. Well, thank you for everyone, appreciate the questions. I'd like to thank everybody for participating today and you're interested in and John have a great day and please contact us at irent.com.

All right. Uh, should you have any additional questions, we'd be happy to handle this.

Operator: Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. Everyone, have a great day.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect. Everyone, have a great day.

Q4 2025 M-Tron Industries Inc Earnings Call

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